So, you’ve decided to open up a bike rental shop, or you’re at least thinking about it—awesome!
Starting any type of business requires a lot of planning, preparation, and setting up processes, and a bike rental business is no exception.
This guide takes you through every step on the way to starting, managing, and growing a bike rental business. We are fortunate to have an experienced professional with us to share the best practices and tips—Kuutti from Roll Outdoors!
For the past four years, Roll Outdoors has offered guided mountain biking tours in the scenic arctic nature of Lapland. What started out as a small business owned by two friends is nowadays running with the help of 8 full-time employees in three locations (a fourth opening soon), expanding their mostly tourist-based audience to a more local one.
Start with a business plan
We know your fingers might be itching already, waiting to get to work on your rental business idea, but at this point, we want to highlight that you should never skip the phase of writing a comprehensive business plan when you are starting a new business or even opening up a new branch. It will save you from so much trouble in the long run when you have plans and scenarios written out in advance. Furthermore, a solid business plan is mandatory if you intend to seek external funding for your business.
The purpose of a business plan is to give a comprehensive view of your future business and the environment where it will operate. The business plan makes your dreams more tangible by forcing you to write down concrete plans and practical steps related to achieving your goals. However, your business plan doesn't need to be an accurate roadmap of actions.
Company description goes into detail about your company's purpose. What is the product or service you provide, and why does it generate value for your customers?
For a bike rental business, it can explain your business type more in-depth. Below, you'll find examples of different types of bike rental businesses:
City bike rentals
City bike rentals are particularly popular among tourists who like to explore their destination by bicycle. Usually, the customers of these businesses are most interested in an efficient, comfortable, and safe way of commuting from one place to another. Depending on the destination, the business can be seasonal. Usually, there is a high potential for additional sales from services like bike repairs, guided tours, or selling maps, for example.
Premium bike rentals
Premium bike rental businesses want to offer only the best bicycling experiences for quality-conscious consumers. Usually, these businesses focus on a specific group of consumers who are either locals or tourists arriving at the destination, particularly to cycle. A high-end road bike rental shop along the route of the Tour de France would be a good example. The experience is more about the sport, having fun, and experiencing something unique rather than commuting.
Bike tours and rentals
What would be better than cycling with someone local who shows you all the cool new places you would have otherwise missed? Bike tours are a great way to spend a holiday for the whole family, so why wouldn’t you use your local expertise and take advantage of it?
Guided tours can either be additional sales or the main business. Nevertheless, offering guided tours in addition to bike rentals is an excellent added value to the overall customer experience.
Bike trekking is fastly growing its popularity among environmentally-conscious travelers. The idea is to offer well-productized and pre-planned trips from one place to another, including bikes and accommodation, luggage transportation, and food as additional services. Bike trekking trips are kind of like long tours with or without a guide. In addition to round trips, it is common to have one-way trips in the offering as well, which puts more pressure on the logistics aspect of the business.
A trending business model within the ski and outdoor resorts that are eager to offer experiences year-round, thus reaching a wider audience. The business can include selling entrance or lift tickets. If your location allows, downhill bicycling is growing its popularity fast, making bike parks high-potential businesses either on their own or in addition to ski rentals.
Demo bike rentals
Manufacturers and bike retailers probably know that nothing beats a test drive as a sales closing method. Usually, the possibility to test a bike before the purchase is offered for free, so it’s not really a business itself. However, as consumer behaviors are shifting towards buying access instead of ownership, launching a business unit around rentals or subscriptions is a potential move for manufacturers and retailers.
Long-term bike rentals and leasing
As governments and municipalities are looking for alternatives for private cars, especially in bigger cities, long-term bike leasing has risen its popularity. Governments subsidize bike leasing in many countries, making it very lucrative from consumers’ point of view. Especially e-bikes are arousing great interest among consumers looking for alternatives for private ownership of a bike (or a car).
An essential part of your business plan is market analysis. Before setting up shop and getting started, it’s important to make sure there is a potential audience and a demand for your service.
Kuutti pointed out that if you like going to a certain spot and enjoy biking around a certain area, most likely, there are other people who would enjoy it as well. With this being said, pay attention also to the location and the length of the season: you want to have enough active business days to make your bike rental business profitable.
Getting started with bike rentals is still quite easy since the sport in Finland is in baby shoes compared to, let’s say, snowboarding and skiing. Since those sports already have a strong presence locally and huge resorts and chain shops running the industry, it’s significantly harder to make a breakthrough.
Competition and location
Choosing the space for your rental shop is a tricky process, and there’s a lot to consider. Here are some basics to start off with:
While choosing the area or location, keep in mind the accessibility of your shop. Is there enough parking, is it easy to get to, is it easy to find or even stumble across? Also, scout out areas that allow the customer to immediately partake in the sport without the need to move to other locations. For example, city centers are probably not the best locations for renting out mountain bikes unless there are routes nearby.
Unless you’re 100% confident your offering is better than the neighbor's, you might want to stay away from super crowded areas with multiple shops. However, being located next to maybe one other shop isn’t necessarily bad; you can save money on advertising and get better visibility from potential customers. Setting up shop next to an already active place confirms that there is a demand for your service, which you can play to your advantage.
It seems like an obvious thing, but you need to have a clear understanding of how much you can afford to pay. This means taking into account utility bills, insurance for both the space and gear, and some cushioning in case of unexpected expenses.
Needless to say, the rental shop space should be multi-functional: it should be inviting and easy to navigate around for both the customers and employees, should have enough space for all the equipment, and an area designated for equipment maintenance.
Most of the time, entrepreneurs can’t afford to pay for unused space, but if your financial situation allows, invest in a bigger space straight from the bat: it’ll be much easier later while adding more equipment to your inventory. A bigger space is also nicer from the customer's perspective.
When it comes to the space and shape of the shop, a classic one is a pipelined rental space: customers walk in through one door, deal with payments and registrations, receive their equipment, and exit through a different door.
Inventory and financials
Kuutti pointed out that all of Roll Outdoors' staff members enjoy the sport, and when it comes to the equipment they offer, they don’t have anything that they themselves wouldn’t use. You wouldn’t offer something you don’t like to someone else - so why would rental bikes be any different?
Where to get the bikes from?
For rental shops, bikes are usually bought in bigger batches straight from the manufacturer or the importer. Having deals with manufacturers usually means you get the bikes with a little discount, but it’s still not a cheap shopping trip.
It’s easy to get bad bikes for cheap, and since the purchase price is so high, it emphasizes the importance of proper maintenance of the bikes for the business to be in any way profitable.
It’s naive to think that it would be viable to buy an expensive bike, run it for a few seasons until it pays itself back, and then sell it for pennies. You have to take care of the bike for it to keep its value for reselling purposes.
How to decide on what to buy?
For the average Joe, the bike itself might last for years, maybe even a lifetime. In Roll Outdoors’ case, a bike’s lifecycle is only one year. Currently, Roll Outdoor has a fleet of a few dozen bikes, and it has steadily grown over four years. In the next few years, however, they’re planning on exponentially growing their inventory as they are also opening new locations. Because of the short lifespan of the bikes (for rental purposes), the purchase decision criteria are also different, and there’s a lot to consider.
One of the most important things Roll Outdoors takes into consideration while buying more equipment is maintenance and spare parts, to be exact:
While having a large number of different kinds of models, we try to make sure the bikes have a lot of the same parts. This makes getting spare parts and maintenance much easier and more cost-effective.
How to ensure that you get your money’s worth?
A rental shop’s main source of revenue is the equipment, meaning if something happens to it, the shop loses money. While there is a possibility to insure the equipment in case of theft, for example, there’s really no alternative way of replacing your main source of income in case something happens.
Nonetheless, Kuutti mentioned that people usually have good survival instincts when it comes to rental gear, and the occurrence of customers not being willing to pay for the damage is quite rare. However, you can always play it safe by setting up security deposits, especially with the more pro gear or having mandatory waivers that each customer has to sign.
This [waivers] has usually led to the customers using the equipment in a more civil manner. Also, paying attention to safety and instructing on how to use the equipment correctly makes a huge difference. Paying a little bit of extra time in training pays off.
Doing the math
Once you have everything else settled, it's time to pay attention to the financials. Unless you have very deep pockets or you have an external investor backing you up, you will most likely have to turn to the banks and ask if they can loan you the money to get started.
When you know all your costs and salaries, you can calculate how many bikes you need to rent and at what price to be able to cope with the fixed costs. If your business is seasonal, remember to include the more silent months into your calculations because the expenses run throughout the year.
It's hard to imagine managing Roll Outdoors without any sort of online presence since 100% of our sales have always come from some form of an online platform, whether it would be via email or the booking system. Especially after taking Twice into use, there has been a significant increase in online bookings.
Running any form of business without any sort of online presence seems impossible in the modern world. A website and some social media channels are essential for reaching potential customers and turning them into recurring, buying customers.
The ability to rent and pay in advance has been a new addition to Roll Outdoors, and they believe that ecommerce is the right way to go — especially since nowadays people are so used to the convenience of paying in advance using whatever device they want.
Convenience is key when it comes to your target audience: the purchase experience should be as easy as possible so the customer becomes a recurring face at your shop. Having an online platform is quintessential in making sure that happens.
To know what kind of systems or tools you need, you must understand the differences between just an online booking system and rental software.
Furthermore, don't downplay the role of the user experience. Your website will directly impact your company's reputation, reliability, and sales.
Invest in your website — find someone you know or a company that can handle the website’s development side for you.
It’s important to establish a balanced marketing strategy straight from the beginning. It’s rare for people to find a business without any kind of marketing. However, your marketing should be in proportion to your ability to cater to your audience - you don’t want to over-promote yourself and end up being unable to meet the demand.
If you have a good product but no marketing, you won’t be able to make the sales you need to keep your business afloat. On the other hand, too much marketing is not necessarily good either, you still want to be able to keep up with the demand.
To find the right marketing strategy for your business, you need to know who your audience is and where to find them. We have written another article that evaluates the pros and cons of different digital marketing strategies.
Next, we will go walk you through the processes of managing the day-to-day of your bike rental business.
Bike rental management: running your day-to-day
In this section, Kuutti will help us understand the most important processes of running a rental shop and what makes a good renting experience from the customers’ point of view.
Successful and well-kept processes help keep things like inventory management, customer service, and bike maintenance, among others, streamlined and under control from the shop’s point of view.
At the same time, smooth processes have a direct effect on the customer experience - when a rental shop’s processes are in line, it creates a professional and reliable image for the shop, all while allowing the staff to focus on providing the best service for the customers.
To help you measure the performance of your processes and set KPIs, we wrote a guide on different inventory metrics. Check it out if you want to get deeper into the topic of inventory tracking.
Now that has been said, let us take a look at what advice our industry professional has regarding the essentials of running a rental shop.
Promote your rental business
The importance of marketing cannot be highlighted enough - particularly during the time period before you even open up your rental shop’s doors. You want to do as much awareness marketing as possible to inform people of your existence and convey a good vibe about your shop in advance. You already win half of the battle when potential customers are aware of you before they even realize they need your services.
Just like we mentioned in our previous post, balance is key. You don’t want to over-promote yourself and end up unable to meet the demand.
Social media is a small business' friend
Before Roll Outdoors had even opened its first location, they were already running an Instagram account. One of the founders spent his time filming his biking trips, while the other one took care of the editing and posting online, and slowly they gained an audience who was interested to see what they were up to. Now, even the newest members of the crew are in on creating more content for their marketing channels.
Especially for a smaller business, it pays off to put in effort into social media - even with a zero budget, you can do so much and ultimately find your target audience.
Even if you’re not putting a lot of money into the promotions and ads, if you take into account the working hours that it takes to create the materials and content, you'll see that you actually do spend a considerable amount on marketing. However, investing in marketing and content creation pays off. Roll Outdoors’ have experienced a clear interest and demand for the content they produce, and it’s evident in their stores’ activity levels.
Honestly, I don’t know if we would even have a business to run without any marketing or content creation. Even though the cost of a marketing person might seem too much for a small rental shop, it pays itself back.
Offer value through your content
If you have the opportunity, create and use videos. If I had to choose between images or videos, I’d probably only use videos.
Another thing is to offer valuable content for your followers instead of only promoting your services. For example, information on where the best trails are makes awesome and engaging content for your followers.
If you’re able to offer interesting or new locations where to go to, it will most definitely show in your customer traffic.
Manage online rentals
A part of effective marketing is maintaining a good, solid website where you direct your followers and people reacting to your marketing campaigns. In addition to the visual side of the website, make sure to have all the needed, accurate information available on your website. Things like general store info, opening hours, phone numbers, email addresses, etc., are things potential customers will be looking into.
Integrating a bike rental booking system into your website makes running your store even more efficient. Not only offering the opportunity to book gear straight away but also providing the customers with detailed product descriptions and clear instructions makes the renting experience so much easier for the customers.
Taking your time and putting effort into the website’s content will also benefit the store’s staff greatly. The more information is available online, the less time your staff will spend answering the phone and emails. Allowing customers to independently find what they need, book the gear, and even pay in advance makes the in-store processes much lighter and more streamlined.
Provide unmatched customer service
Customer service is one of the most important aspects of a successful customer experience. Who your customer will meet when going into your store will be a make-or-break moment: even if the premises themselves aren’t as polished as they could be, having friendly employees who are happy to help and know what they’re talking about makes the biggest difference.
Making the customer feel welcomed, giving tips on routes, helping with the equipment, making sure they have the right equipment, and overall taking care of them will never stop being important.
Being available to answer questions or concerns provides not only a better customer experience and a better reputation for your business but also increases the probability that the customer will go through with their booking.
This applies both offline and online - being able to get back to a customer’s call or email in a timely manner is extremely important. Again, providing enough information on the website ensures your employees can focus on walk-in customers rather than keeping up with calls and emails.
Also, if you can, invest in chat service and assign an employee to take care of the online customer service — until then, make sure your website content is up-to-date.
Maintain the bikes
Maintenance times are one of the most important things to keep in mind while running a bike rental shop.
For Roll Outdoors, when they opened one of the other locations, they weren’t prepared for the demand that they received. While being a positive problem, a poorly managed maintenance schedule can lead to either the rental equipment running out, leaving some customers without gear, or the equipment getting damaged while in use.
Since rental equipment is the center of the business, it’s important to prioritize and take care of the equipment. If something happened during a customer’s rental period due to the lack of maintenance work or if the product was not up to par with what they expected, it might ruin the customer’s whole trip.
Letdowns hurt not only the overall customer experience but also the rental shop's reputation, leading to losing potential customers.
Find the best tools to support your business
Don’t hesitate to try out different systems. For each process, you should have some kind of tool that will help you manage the process better and keep it systematic and streamlined.
For example, Roll Outdoors utilizes multiple systems to keep their processes in check — Twice for bookings and inventory management, a separate one for scheduling the maintenance work, another one for employee shifts, and so on.
Don’t get stuck on the same old systems — when your business starts to grow or change, make sure you always choose the tools that are suitable for you, and that can meet your needs.
Growing your bike rental business
So, you’ve successfully started your bike rental shop and are looking into growing your business further?
The final section of this article will cover all the essentials you need to consider when planning your expansion.
Plan your expansion
Having multiple locations doubles the workload and complicates all of your already-existing processes. Realistically, a project of this nature isn’t exactly a walk in the park: it’s tedious work and will take up many working hours.
On top of everything, there is no one right way to expand in the bike rental industry. Some decide to grow their only location and refine their services to perfection, while others, like Roll Outdoors, decide to grow by opening up more locations.
However, proper planning, preparations, and evaluations of what will work best for you will ease the workload, making the growth process much smoother.
Find new locations
When deciding on your approach to whether you want to grow your only location or expand by opening another location, keep in mind the industry you’re in and the popularity it holds in your country/area. Expanding in a highly competitive market is complicated and challenging.
Even though cycling tourism is growing fast, bike touring in Finland was, and still is, in its infancy. Therefore, it was easy for Roll Outdoors to expand and find locations with lots of demand and little competition.
Roll Outdoors’ approach was to find interesting and different geographical locations where they could start off with a small budget and minimal risk. They start off small, checking the demand and profitability and investing more as they go. For a small business, this strategy has worked out well so far.
If we had used all this energy and effort into developing our first location, we don’t know what situation we would be in right now and whether our operations would be bigger or smaller. We believe opening up multiple locations was the right path for us.
Another thing to consider is the geographical area. Think about the geographical landscape in your country or area. Does it vary a lot, thus offering an opportunity to create different themes for your locations? The geographical variance of Finland provided an opportunity for Roll Outdoors to open multiple locations offering different types of products and bike tours.
Differentiate your services from each other
Offering different types of services and activities between locations allows you to reach a larger audience.
Each of our locations serves different customers’ needs, offering them a different types of biking opportunities in different landscapes.
Having locations in different areas or even climates also means that while one season is ending in one location, another one is only starting. Keeping this in mind, choose your geographical location and type of service wisely: you don’t want to end up in an area where the season is extremely short.
Update your processes to support growth
One of the most fundamental changes that will occur with the growth of your business is the need to develop your processes and update your online store.
This will require meticulous planning and distribution of resources. Make sure your contact information is up-to-date, all the products on your website are shown in the right categories and physically moved to the right locations.
It can’t be emphasized enough how important it is that you go through every single little thing from your available gear to season passes. You have to be careful and make sure everything is updated and put into the systems correctly.
If there’s a wrong email address or a product is marked under the wrong location, it will complicate the employees’ jobs and take up a lot of time. Most importantly, leaving the customer confused and, in the worst case, without the right gear affects the overall customer experience in a negative way.
How your growth affects communications and marketing?
Any type of expansion or growth also means updating your communication and marketing strategy. One of the decisions you’ll have to make is whether you’ll have separate social media accounts for the different locations or if you’ll continue with only one.
If you continue with one general account for all your locations, make sure your communication is clear: if you have gained a following thanks to a certain type of content you post, you don’t want to disappoint your followers by starting to post about something completely different.
Especially in the age of social media, you have to be smart with what and how you’re marketing. People nowadays just scroll through without reading the captions properly, so try and be as accurate as possible in order to avoid disappointments.
Having at least double the amount of marketing-related work to deal with, consider setting concrete budgets & strategies and hiring someone to take care of marketing as a whole. This will help with maintaining the consistency and quality of your content.
Grow your team
Naturally, a growing business will need more workforce. You’ll need to figure out who to hire: full-time and seasonal employees, marketing managers, etc. This comes with setting up an accurate budget so you can manage to pay them, of course.
Since paying salaries isn’t cheap, it’s important to have a proper HR and expansion plan. On the other hand — what else would you do with money than hiring good people?
Kuutti pointed out that all the practicalities tend to work out in the end. Most importantly, you believe in your business and have fun with it. If you genuinely enjoy what you’re doing and the services you’re offering, without a doubt, other people will enjoy it — you just have to be persistent and not give up when times get tough.
My final advice would be: Be brave. Starting your own business is at least worth a try if you believe in it! But don’t be limited to one thing — be open to change and even if something doesn’t work out, try something else. There will always be hits and misses, it’s all about how you work around them.
That’s it for the article! Hope you found these tips and how-tos helpful for your bike rental business, no matter in which phase you are. We wish you the best of luck with your already and to-be existing businesses. Of course, a huge thanks to Kuutti and Roll Outdoors for sharing their tips and expertise.
Photos by: Roll Outdoors